Blog posts tagged with 'platinum'

Gold consolidates ahead of NFP. Silver remains supported by German spending bazooka.

OUTSIDE MARKET DEVELOPMENTS: The ECB cut its deposit rate by 25 bps to a more than two-year low of 2.5%, in line with expectations. In the policy statement, the ECB acknowledged that "monetary policy is becoming meaningfully less restrictive."

Growth forecasts were trimmed to 0.9% for 2025, 1.2% for 2026, and 1.3% for 2027. "The downward revisions for 2025 and 2026 reflect lower exports and ongoing weakness in investment, in part originating from high trade policy uncertainty as well as broader policy uncertainty."

During her presser, ECB President Lagarde avoided directly responding to questions about a potential pause, saying that the central bank must be "agile in response to the data."

Despite today's easing, German bund yields continue to soar, dragging other long rates along for the ride. On Wednesday, German yields rose the most since reunification in 1990.

Germany's new incoming government revealed plans to significantly loosen the "debt brake" to allow for a massive increase in infrastructure and defense spending. The presumed next chancellor of Friedrich Merz's 'whatever it takes' plan "allows for potentially unlimited borrowing for defence spending and creates a €500bn 10-year fund to drive infrastructure investments," according to the FT.

The euro has benefited from surging bund yields, pushing the dollar index to another four-month low. Increasingly dovish Fed expectations are adding additional weight to the greenback.

Ongoing angst about tariffs and the implications for inflation are contributing to the bond market turmoil. The White House has delayed some tariffs until April 2, when sweeping reciprocal tariffs are slated to take effect.

The constantly shifting policy is driving uncertainty and risk aversion. Yet, there still seems to be some hope for a comprehensive trade deal with Mexico and Canada. Meanwhile, China threatened that it was ready to fight “any type of war” with the U.S.

Challenger Layoffs surged to a nearly five-year high of 172.0k in February versus 49.8k in January. "With the impact of the Department of Government Efficiency actions, as well as canceled government contracts, fear of trade wars, and bankruptcies, job cuts soared in February," said Andrew Challenger.

Trade Balance exploded to a record-wide deficit of -$131.4 bln in January, outside expectations of -$123.0 bln, versus a revised -$98.1 bln in December.

Initial Jobless Claims fell 21k to 221k in the week ended 1-Mar, below expectations of 232k, versus 242k in the previous week. Continuing claims jumped 42k to 1,897k in the 22-Feb week from 1,855k.

Q4 Productivity was revised up to 1.5%, versus a 1.2% advance reading and a revised 2.9% in Q3. ULCs were revised down to 2.2% from 3.0%, versus -1.5% in Q3.

Wholesale Sales tumbled 1.3% in January, well below expectations of +3.0%, versus a positive revised +1.4% in December (was +1.0%). Inventories rebounded 0.8% after a 0.4% decline in December.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$13.35 (-0.46%)
5-Day Change: +$40.90 (+1.42%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,145.06 - $2,955.40
Weighted Alpha: +33.96

Gold is consolidating around the 20-day moving average as the market looks ahead to tomorrow's U.S. jobs data. The yellow metal continues to garner support from haven interest and a weaker dollar.



Downticks below $2,900 have attracted buying interest, but further serious attacks on the upside are unlikely until the NFP report is behind us. The ADP survey and today's Challenger report suggest there are downside risks for NFP.

A significant payrolls miss would continue to bolster dovish Fed expectations. Right now, Fed funds futures favor a rate cut in June, with two additional cuts by year-end.

Massive gold inflows to the U.S. in recent months contributed to the blowout in the trade deficit. However, as noted in yesterday's commentary, the market dislocation associated with these flows appears to be easing.

Gold lease rates have fallen significantly, and the contango between spot and front-month futures continues to moderate. Short covering in the futures market played a role in gains this week.

Chart/Fibonacci resistance at $2,928.75/29.68 is the trigger for a retest of last week's record high at $2.955.40. Beyond that, $3,000 remains a valid objective.

The low from European trading at $2,893.31 is now the intervening barrier ahead of Tuesday's low at $2,883.58. Keep an eye on the 20-day MA at $2,909.75 on a close basis.

Silver is trading higher for a fourth session, boosted by Germany's "whatever it takes" borrow and spend plans, further pledges of stimulus from Beijing, and a weaker dollar. The white metal has set new two-week highs, bringing the $33 level back within striking distance.



A sustained push back above $33 seems unlikely ahead of the jobs report. Silver made several forays above $33 in February but was unable to notch a close with the 33-handle.

A close above $33 would bode well for a retest of the February highs at $33.34. An eventual breach of this level would return focus to last year's cycle high at $34.853.

Signs of weakness in the U.S. labor market would temper some of the German-inspired enthusiasm and could lead to a retreat into the range. Today's overseas low at $32.306 protects the 20-day MA at $32.167. Additional tiers of support are noted at $31.809 and $31.517.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

Gold and silver continue to recover from last week's retreat

OUTSIDE MARKET DEVELOPMENTS: President Trump spent nearly 100 minutes outlining his second-term vision last evening, declaring that "America is back." It was the longest joint address or State of the Union ever delivered.

The President touted the plunge in illegal border crossings to record lows as well as successes in rooting out waste, fraud, and abuse within the federal government. He also reiterated his vow to beat inflation by first driving down energy prices.

"We have accomplished more in 43 days than most administrations accomplished in four years or eight years, and we are just getting started," he said.

Trump confirmed that he had received a conciliatory letter from Ukrainian President Zelensky expressing a desire to "come to the negotiating table as soon as possible to bring lasting peace closer." This dials down geopolitical tensions that spiked after Zelensky was dismissed from the White House after a terse meeting with Trump on Friday.

There was also revived optimism on the trade front just a day after the Trump administration imposed tariffs on its largest trading partners. Commerce Secretary Howard Lutnick hinted that a deal with Mexico and Canada could happen as soon as Thursday.

Trump still plans to proceed with reciprocal tariffs in April. "Whatever they tax us, we tax them," he explained in last night's address.

It is becoming increasingly clear that the President's actions are designed to drive America's trading partners to the bargaining table. Having the world's largest consumer market is a pretty effective cudgel.

Revived optimism on trade and a peace deal between Russia and Ukraine also rusucitated risk appetite.

Today's services sector beats and solid factory orders in January provide some counterbalance to weakness in the manufacturing sector seen earlier in the week. However, recent incoming data have generally called into question the resilience of the U.S. economy, leading to downward revisions to Q1 GDP expectations.

Much weaker than expected private sector jobs growth in February suggests economic weakness may now be hitting the labor market. This has led to whispers of a possible NFP miss on Friday. The market is expecting a payrolls increase of 160k.

These concerns are eclipsing worries about revived inflation and fostering more dovish monetary policy leanings. This has helped push the dollar index to four-month lows.

Fed funds futures suggest the next Fed rate cut will happen in June and have nearly priced in three 25 bps cuts by year end. It was just a matter of weeks ago that the market foresaw a single 25 bps cut late in the year.

The ECB is widely expected to trim rates by 25 bps when they announce policy tomorrow. While inflationary pressures have continued to ease, Germany's newly proposed €500 bln spending package could give the central bank pause.

Germany's new ruling party is seeking to remove fiscal constraints and unleash a massive spending blitz on infrastructure and defense. Arguably, this too is a win for President Trump, who has been calling for greater defense spending from other NATO members since his first term.

“In view of the threats to our freedom and peace on our continent, whatever it takes must now also apply to our defense,” said Friedrich Merz, leader of the CDU/CSU coalition. Euro gains contributed to weakness in the dollar.

MBA Mortgage Applications jumped 20.4% in the week ended 28-Feb, versus -6.4% in the previous week. Purchases rose 9.1%, while refis surged 37%. The 30-year mortgage rate fell to 6.73% from 6.88%.

ADP Employment Survey revealed a 77k rise in private payrolls in February, well below expectations of +139k, versus an upward revised +186k in January (was +183k). ADP noted "hiring hesitancy among employers as they assess the economic climate ahead.

S&P Global Services PMI was revised up 1.3 points to 51.0 in February from a preliminary print of 49.7, versus 52.9 in January.

Services ISM rose to 53.5 in February, above expectations of 53.0, versus 52.8 in January. Prices jumped to 62.6 from 60.4.

Factory Orders rose 1.7% in January, above expectations of +1.6%, versus a revised -0.6% in December (was -0.9%). It was the largest jump since July.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$4.29 (-0.15%)
5-Day Change: +$2.09 (+0.07%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,124.31 - $2,955.40
Weighted Alpha: +33.99

Gold continues to retrace last week's corrective losses. New highs for the week were achieved in early U.S. trading as increasingly dovish Fed expectations and euro strength weighed on the dollar.



As the contango between spot and front-month futures continues to moderate, short covering in the futures probably played a role in this week's rebound. The contango is less than $10 today, but it was in the $50-$70 range at one point.

Could the dislocation associated with the massive flows of physical gold to the U.S. finally be unwinding? That will likely be determined developments on the trade front. 

The yellow metal has nearly completed a 78.6% retracement of last week's pullback. However, the trade is likely to remain somewhat cautious ahead of Friday's jobs report as they look for further clarification of the Fed's policy intentions for the remainder of the year.

A beach of $2,928.75/29.68 would clear the way for a retest of last week's record high at $2,955.40. Beyond that, the long-standing $3,000 objective remains valid.

The bull camp is going to want to see gold hold above $2,900. Today's intraday low at $2,898.36 protects yesterday's low at $2,883.58.

Silver is up more than 2% today, buoyed by Germany's massive spending plans, promises of new stimulus from China, and optimism about a possible trade deal with Mexico and Canada. Fresh cycle lows in the dollar are helping the cause for the bulls.



The convincing move back above $32 and the breach of the 20-day MA at $32.143 cleared the way for a retest of last week's high at $32.724. Fresh two-week highs would further encourage the bull camp and favor renewed tests above $33.

It's been an impressive move this week, so I wouldn't be surprised to see some profit-taking into today's close as the trade looks ahead to Friday's U.S. jobs data. Signs of a weakening labor market could further undermine bets on U.S. economic resilience. 

The 20-day MA and U.S. session lows at $32.143/057 mark first support and protect the overseas low at $31.089. The next tier of support is defined by Tuesday's low at $31.517.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

Gold rebounds above $2,900 on haven demand, silver flirts with $32

OUTSIDE MARKET DEVELOPMENTS: President Trump's promised tariffs against America's largest trading partners took effect overnight. Global stocks came under pressure as trade war worries ramped up risk aversion.

Duties on EU products are thought to be forthcoming. China immediately retaliated with new tariffs on U.S. farm products. Markets are fearful that Canada and Mexico also have retaliatory levies planned.

Escalating trade tensions threaten to stoke both inflation and growth risks. The Atlanta Fed's GDPNow indicator has plunged into negative territory, driven by the trade deficit blowout as importers front-ran tariffs, weak personal consumption, and soft manufacturing data. 

The GDPNow chart looks horrible, but this indicator can be quite volatile. The NY Fed's Nowcast continues to suggest a growth rate close to 3%.

At a minimum, GDPNow is a troubling harbinger, contributing to already elevated market jitters. Look for Q1 GDP forecasts to continue eroding.

The market will be paying close attention to jobs data this week to see if cracks are forming in the labor market. Median expectations for the ADP survey are +139k and +160k for NFP.

Commerce Secretary Howard Lutnick indicated he may strip out government spending from GDP. “You know that governments historically have messed with GDP. They count government spending as part of GDP. So I’m going to separate those two and make it transparent.” 

“A more accurate measure of GDP would exclude government spending,” wrote Elon Musk on X. While the administration claims such a move would bolster transparency, many are arguing it is an effort to obscure slower growth stemming from massive cuts to government. 

Even with Europe now taking the lead on negotiations between Ukraine and Russia, President Zelensky said that an end to the war was “very, very far away.” Trump warned that "if somebody doesn’t want to make a deal, I think that person won’t be around very long."

Trump paused military aid to Ukraine following Friday's Oval Office clash. Zelensky characterized that meeting as "regrettable," indicating a willingness to "make things right” and continue working toward peace.

Meanwhile, the ceasefire between Israel and Hamas appears to be in jeopardy. Israel has halted aid shipments into Gaza until Hamas agrees to new conditions.
 
President Trump will speak before a joint session of Congress this evening. "There will be a lot of surprises and a lot of made-for-TV moments,” said an administration official. Markets typically don't like surprises.

RCM/TIPP Economic Optimism Index fell 4.2% to 49.8 in March, below expectations of 53.1, versus 52.0 in February. It was the first read below 50 since Trump's election.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$27.05 (+0.94%)
5-Day Change: -$6.66 (-0.23%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,111.24 - $2,955.40
Weighted Alpha: +33.36

Gold regained $2,900 as rising trade and geopolitical tensions drove risk aversion and flight to safe havens. A 12-week low in the dollar index and deleveraging pressures are contributing to today's bid in the yellow metal.



The World Gold Council reported that global central banks continued their gold buying spree in January. Net buying totaled 18 tonnes, with Uzbekistan, China, and Kazakhstan the top three buyers.



More than 61.8% of last week's correction has now been retraced, but gains at least temporarily stalled ahead of the 78.6% Fibonacci level at $2,929.68. A breach of this level is needed to clear the way for a retest of last week's record high at $2,955.40 and the long-standing $3,000 objective.

The weekly key reversal from last week remains a troubling technical feature and warrants a degree of caution when it comes to fully recommitting to the dominant uptrend. I'm going to base my short-term confidence on today's close relative to the 20-day moving average at $2,903.87.

 A close below $2,903.87/$2,900.00 would leave secondary support at $2,883.58/80.99 vulnerable to a retest. The latter is marked by today's overseas low and the halfway back point of the rally off last week's low at $2,835.23.

Silver has been pulled higher by this week's haven-inspired rebound in gold despite the darkening growth picture. The weaker dollar is providing some additional underpinning.



White metal gains have faltered ahead of $32, keeping the 20-day moving average at $32.114 at bay. A short-term close back above $32.00/114 is needed to bolster the confidence of the bull camp, but rising trade tensions and growth risks are likely to mean that silver will lag on the upside.

Scope remains for further tests of the 100-day MA at $31.281. Today's overseas low at $31.517, and the 50% retracement level of this week's bounce at $31.421 provide intervening barriers.

The Silver Institute projects that silver demand will remain steady at 1.20 billion ounces this year. They estimate that supply will increase 3% to 1.03 billion ounces. This should result in a fifth consecutive annual deficit in 2025 and provide important price support.

The basic supply/demand fundamentals remain broadly supportive for silver. While I favor the upside over the longer term, I suspect the uptrend will continue to be punctuated by sometimes volatile setbacks.

In their most recent newsletter, the Silver Institute also makes note of research done with PMI that concluded "no correlation exists between the overall level of above-ground stocks and the silver price."

"Once only a storehouse of wealth, for instance in bars, silverware, jewelry and coins, items that stay mostly as they were produced – and largely unavailable to the market – silver has become an industrial metal that usually gets consumed or otherwise taken out of circulation except for recycling, whose effect can vary."


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

Gold and silver recover from last week's sell-offs on revived geopolitical tensions, softer dollar

OUTSIDE MARKET DEVELOPMENTS: Hopes for a speedy end to the war in Ukraine were dealt a blow after Friday's Oval Office meeting between Ukrainian President Zelensky and President Trump turned confrontational. Zelensky was asked to leave the White House at the direction of President Trump and return when he was ready for peace.

"Of course, we understand the importance of America, and we are grateful for all the support we’ve received from the United States. There has not been a day when we haven’t felt gratitude," Zelensky said on Sunday in an effort to smooth things over.

European leaders rallied around Zelensky over the weekend and are now taking the lead on negotiating a ceasefire. "This is not a moment for more talk. It’s time to act,” said UK PM Keir Starmer.

Having Europe take a more prominent role in negotiations is arguably desirable. However, there is broad acknowledgment that any deal would still require the support of the U.S.

Last week, Trump said he would implement 25% tariffs on Canada and Mexico on Tuesday as promised. China will incur additional 10% duties as the U.S. seeks to curtail the flow of illegal drugs.

While the Fed's favored measure of inflation cooled slightly in January, consumers cut spending by the most in four years. Sticky inflation, weather, and a more general decline in consumer confidence were contributing factors.

Fed funds futures now project that the next rate cut will happen in June. Two such cuts are anticipated by year end.

Friday's nonfarm payrolls report will be a focus this week and may provide some clarity on Fed policy. Median expectations are +160k jobs.

S&P Global Manufacturing PMI was revised up to a 31-month high of 52.7 in February from an initial print of 51.6 versus 51.2 in January. Input cost and selling price inflation accelerated.

Manufacturing ISM fell 0.6 points to 50.3 in February, below expectations of 50.4, versus 50.9 in January. The streak of monthly increases ends at four. Prices paid surged 7.5 points to 62.4 from 54.9 in January.

Construction Spending slipped 0.2% in January, below expectations of -0.1%, versus +0.5% in December.

Domestic Auto and Light Truck Sales for February will be out later today. Expectations are +1.9M and +10.1M, respectively.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$16.22 (+0.57%)
5-Day Change: -$78.64 (-2.66%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,079.74 - $2,955.40
Weighted Alpha: +31.17

Gold starts the week on the bid, buoyed by revived geopolitical risks and more dovish Fed bets. A weaker dollar is providing additional support.



The halfway back point of last week's decline comes in at $2,895.32 and is bolstered by the still rising 20-day MA at $2,900.18. A convincing climb back above $2900 would return credence to the underlying uptrend and initially shift focus to the 61.8% retracement level at $2,909.50.

Beyond the latter, watch $2,929.68 (78.6% retrace) and last week's record high at $2.955.40. Losses from that high were considered corrective, and the $3,000 remains a valid upside objective.

However, the weekly key reversal confirmed on Friday remains a troubling technical feature for the bull camp. We could see at least one more go at the downside.

The 50% retracement level of the rebound from Friday's low comes in at $2,863.68. This level is bolstered by a minor chart point at $2,860.36 and protects the overseas low at $2,857.67. Below that, $2,835.23 and the $2,800 zone would be back in play. 

The COT report for last week revealed a decline of 7.1k in net speculative long positions to 261.6k contracts versus 268.7k in the previous week. It was the third consecutive weekly decline in spec longs.

Silver has rebounded more than 2%, stoked by gold's bounce and a weaker dollar. The white metal plunged 4% last week.  It was the first lower weekly close in six.

 

Broadly firmer manufacturing PMIs are also helping silver's recovery today. "We see room for larger gains in silver as the gold rally consolidates and global industrial production signals a modest recovery," UBS said in a note. Copper got a boost as well.

The SLV ETF saw modest inflows last week. However, the COT report showed net speculative long positions fell by 1.6k to 52.9k contracts, versus 54.5k in the previous week.

CFTC Silver speculative net positions

The inability of silver to sustain losses below the 100-day moving averages is somewhat encouraging. However, it would take a rebound above $32 to ease short-term pressure on the downside. The 20-day moving average comes in at $32.132 to start the week.

If today's rebound in gold proves to be just a brief reprieve, further tests below $31 will have to be considered. With more than 50% of the rally from $28.783 to $33.340 already retraced, the $30.525/516 level (61.8% retrace, 200-day) may still be an attraction.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

2/25/2025

Gold tumbles below $2,900, silver below $32

OUTSIDE MARKET DEVELOPMENTS: Geopolitical tensions are easing in hopes of a negotiated resolution to the war in Ukraine. “It looks like we’re getting very close,” President Trump said on Monday.

Geopolitical Risk (GPR) Index

The GPR index is declining from a 10-month high and has moved below the 7 and 30-day moving averages. The ruble has set a six-month high against the dollar, reflecting market optimism that a deal will be struck and sanctions on Russia will be lifted.

Putin has already offered aluminum supply and cooperation on energy and rare earths development. Trump posted on TruthSocial that "major Economic Development transactions" between the United States and Russia are being discussed.

Speaking at the White House, French President Macron struck a more cautious tone; pointing out that it was Putin who violated the peace and warning that Russia has a history of violating ceasefire agreements. Nonetheless, he conceded that a deal was "feasible" within the next few weeks.

Meanwhile, a top deputy of Volodymyr Zelenskyy cautioned that Ukraine would not concede any territory. "What I can say is that we, now, are not ready to accept any territorial concessions whatsoever. We have no other option but to say no to a bad peace deal," said Ihor Brusylo.

Given the blood and treasure expended by Russia over the past three years, I don't think Putin can entirely withdraw from Ukraine without political repercussions at home. A lot can still go wrong here.

Despite some optimism on the geopolitical front, markets remain decidedly in risk-off mode. Concerns about the health of the U.S. economy continued to mount due to eroding consumer confidence and rising inflation worries.

“In February, consumer confidence registered the largest monthly decline since August 2021,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “This is the third consecutive month on month decline, bringing the Index to the bottom of the range that has prevailed since 2022." she added.

The Trump honeymoon may be over amid worries about his trade policies, inflation, and brash efforts to cut spending and the size of government. While I believe the federal government headcount needs to be slashed, the angst of more than three million employees, and their family members, can have a consequential ripple effect throughout the broader economy.

Will deregulation and expectations of lower energy costs offset the above? Time will tell...  

S&P/Case-Shiller 20-City Home Price Index slipped 0.13% to 332.2 in December from 332.6 in November. It was the fifth consecutive monthly decline, although the annualized pace of gains accelerated to 4.48% y/y, from +4.35% in November.

FHFA Home Price Index edged up 0.4% in December to 436.1, versus an upward revised 434.3 in November. Annualized appreciation accelerated to a 4.7% pace from an upward revised +4.5% in November (was +4.2%).

Consumer Confidence tumbled seven points to an eight-month low of 98.3 in February, below expectations of 102.8, versus 104.1 in January. It was the third straight monthly decline. Twelve-month inflation expectations surged to a 21-month high of 6.0% from 5.2% in January. The Conference Board cited "the recent jump in prices of key household staples like eggs and the expected impact of tariffs" as contributing factors.

Richmond Fed Manufacturing Index jumped 10 points to 6 in February, above expectations of -3, versus -4 in January. It was the first positive reading in 15 months and the highest in nearly three years. Prices paid ebbed to a 2.23% pace from 2.37%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$13.71 (-0.46%)
5-Day Change: +$4.38 (+0.15%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,025.08 - $2,955.40
Weighted Alpha: +40.16

Gold fell nearly 2% to trade briefly below $2,900, weighed by tempered geopolitical risks and perhaps helped by deleveraging. The losses come a day after I highlighted some warning signs in Monday's commentary.



While scope is seen for additional corrective activity, the underlying trend remains decisively bullish. I'm watching the 20-day moving average at $2,881.07 and chart support at $2,880.05/$2,878.68. Below the latter, the 12-Feb low at $2,869.08 would be in play.

As noted yesterday, there is risk for a protracted corrective phase which could mean $3,000 is on hold for a while. The next couple of sessions will tell us a lot.

A breach of the 20-day moving average on a close basis would suggest potential as low as $2,748.41 (50% retracement of the rally from $2,541,42 to $2,955.40). This level is bolstered by the 50-day moving average at $2,754.32. Good intervening support is noted at $2,800.00/$2,797.26.

A rebound above the halfway-back point of this decline at $2,925.06 would ease pressure on the downside somewhat. While not a guarantee of imminent new highs, it would be viewed as encouraging to the bull camp.

President Trump reiterated yesterday that he's interested in the gold reserves held at Fort Knox. "We're actually going to Fort Knox to see if the gold is there. Because maybe somebody stole the gold. Tons of gold,” he said.

While I doubt it has been stolen, I do wonder if the Fed can account for all 8,133 tonnes. I also want to know if there are encumbrances on that gold that call into question its ownership.

A comprehensive audit is needed to assure the public that their gold is exactly where it's supposed to be and no other government or entity else has a claim to it. Jan Nieuwenhuijs's open letter to President Trump provides a thorough explanation of why there have been persistent concerns about U.S. gold reserves for decades. 

If Treasury fails to provide said assurances, I think the dollar's position as the global reserve currency would be further eroded. A weaker dollar would further exacerbate inflation and provide yet another driving force behind the dollar-based price of gold.

In such an instance, I'd be thinking seriously about $5,000 gold.

Silver plunged back below $32, weighed by the retreat in gold. Arguably, gold's strength and a resilient U.S. economy were the last underpinnings for silver amid mounting global growth risks and worries of an impending trade war.


  
The tumble below $32 shifted focus to the 11-Feb low at $31.334 and the 100-day MA at $31.257. Below these levels, the halfway-back point of this year's rally comes in at $31.062.

The 61.8% retracement level of the rally from $28.783 to $33.30 is at $30.525 and corresponds closely with the 200-day moving average. These will be levels to watch on move below $31.

A rebound and close above the 20-day MA at $32.095 would ease pressure on the downside somewhat. However, now I want to see a close above $33 – something silver just couldn't muster in recent weeks – before I can feel confident about a retest of the October cycle high at $34.853.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

Gold ekes out a new record on persistent haven appeal. Silver slips.

OUTSIDE MARKET DEVELOPMENTS: Germany's conservative CDU/CSU alliance won the largest share of the votes in this weekend's snap election. CDU party leader Friedrich Merz is poised to become the next chancellor.

The far-right AfD party received the second most votes, although the CDU/CSU alliance and all other parties have vowed not to invite the AfD into any coalition. The Social Democratic Party (SPD) lost votes both to the right and the further left. In an interesting twist, although they will never work together, the far right and far left parties could hamstring the agenda of the new conservative government.

For example, both the AfD and Die Linke oppose military aid to Ukraine. Together they also could make it difficult to loosen the "debt brake." The throttling of new debt at 0.35% of GDP is keeping Europe's largest economy in recession.

Risk aversion remains elevated in the wake of Friday's U.S. data that reflected eroding consumer and business sentiment, rising inflation expectations, and hints of a weakening labor market. Today's data further stoked risk-off sentiment.

Prospects for the next Fed rate cut are back to July, but that's not providing much relief for the greenback. The dollar index slipped to an 11-week low as the euro was heartened somewhat by the German election results. However, the EU and Germany still face considerable headwinds from weak growth and threatened tariffs.

Meanwhile, the world is watching in real-time as the Trump administration makes radical changes to how the government of the world's largest economy functions. Beyond the headline-grabbing tariffs and slashing of foreign aid, President Trump has urged Elon Musk to be even more aggressive in shrinking the bloated Federal government.

President Trump is meeting with French President Macron today. There is a joint press conference scheduled for 2:00 EST, where global trade may be addressed.

Another round of Russia/Ukraine peace talks is slated to begin tomorrow in Riyadh on Tuesday. Steve Witkoff, the top negotiator for the U.S., has suggested a peace agreement is near. “In any peace deal, each side is going to make concessions, whether it’s territorial concessions, whether it’s economic concessions,” he said.

News also surfaced on Friday that the Wuhan Institute of Virology had discovered a new bat coronavirus similar to COVID. A leak from the Wuhan Institute is widely believed to be the source of the COVID pandemic.

Dallas Fed Manufacturing Index tumbled 22.4 points to a six-month low of -8.3 in February versus 14.1 in January. It was the first negative reading since November. The production index plunged 21 points to -9.1. New orders fell 11 points to -3.5, and capacity utilization slid 14 points to -8.7. The shipments index remained positive but edged down to 5.6.

Chicago Fed National Activity Index fell 0.21 points to -0.03 in January, versus 0.18 in December. The index has now been in negative territory in nine of the last 12 months. "Two of the four broad categories of indicators used to construct the index decreased from December, and one category made a negative contribution in January," according to the Chicago Fed. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$11.03 (+0.38%)
5-Day Change: +$45.33 (+1.56%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,025.28 - $2,9455.40
Weighted Alpha: +40.42

Gold edged to another all-time high in early U.S. trading, buoyed by persistent geopolitical and trade tensions and a soft dollar. While the yellow metal has now reached record highs in five consecutive weeks, upside momentum has waned.

 

Global gold ETFs saw a massive inflow of 52.4 tonnes last week. North American investors accounted for more than 90% of the net inflows.

 

That ties the 11-Mar'22 week as the biggest net inflow since the week ended 24-Jul'20. When we see retail investors pile into the ETFs in such a way, it can be a harbinger of a protracted correction.

Gold set a record high of $2,065.89 in the 11-Mar'22 week and proceeded to correct more than 20%. It took two years for that high to be exceeded and the uptrend to resume.

The COT report revealed net spec long positioning fell 15.8k to 268.7k contracts from 284.5k in the previous week. It was the second straight weekly decline.

CFTC Gold speculative net positions

While the trend remains bullish at this point, the waning upside momentum, the surge in ETF inflows, and the bearish RSI divergence noted last week are all warning signs. Certainly, a Russia/Ukraine peace deal could significantly sap safe-haven demand. 

While $3,000 may still be a powerful attraction, never underestimate the market's ability to disappoint the most investors possible. Heraeus's weekly newsletter, also notes that "signs of excess frothiness are becoming clearer, despite what appear to be firm fundamental drivers."

Keep an eye on support at $2,919.83, the low for both 21-Feb and 19-Feb. A breach of this level would suggest potential back below $2,900 toward the lows from 17-Feb and 14-Feb at $2,880.05/$2,878.68. I'll reevaluate downside risks if gold falls below $2,900.

On the other hand, a fresh round of record highs could keep $3,000 in play. The next Fibonacci objective comes in modestly higher at $3,037.94.

Silver notched a fifth straight higher weekly close last week, but was unable to sustain gains above $33. The white metal begins this week on its back foot by slipping to a four-session low amid persistent global growth concerns that now include the U.S. economy as well.



A minor chart point at $32.102 protects last week's low at $32.004. The latter corresponds closely with the rising 20-day moving average, which has been an important indicator since the beginning of the year.

A retreat below $32 would be troubling for the bull camp, particularly if the gold market were to no longer be providing the support of consistent record highs. Secondary support in silver is marked by the 11-Feb low at $31.334 and bolstered by the 100-day MA at $31.264.

A sustained move above $33 and breach of the 14-Feb high at $33.340 is needed to revive confidence in the uptrend. The $33.554 Fibonacci level remains an additional barrier ahead of last year's high at $34.853.

The COT report showed an increase of 4.8k in net speculative long positions to a 16-week high of 54.5k contracts, versus 49.7k in the previous week.

CFTC Silver speculative net positions

SLV, the biggest ETF, saw outflows of $125.5M. The ETF has seen just two weekly inflows since the beginning of the year, suggesting retail investors remain skeptical.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.